New Mexico Retools Facilities Plan Overturned by Judge

Hoping to end a lawsuit over the way it distributes school
construction money to districts, New Mexico has passed legislation that
would make available $600 million over the next decade for
capital-outlay projects and give preference to cash-poor
communities.

Under the new law, the state would issue bonds totaling $60 million
a year for the next 10 years backed by proceeds from its severance-tax
fund, which is drawn from taxes paid by mining concerns. The law sets
aside a portion of the new money generated by the bonds for districts
less able to raise money through property taxes.

Gov. Gary E. Johnson signed the measure into law last week. The law
was the state's response to a 1998 lawsuit by three school districts
that include vast stretches of American Indian lands and, thus, little
taxable property. That diminishes the districts' capacity to issue
bonds, leaving them with few resources to bolster their
infrastructures.

The plaintiff districts qualify for federal "impact aid"—which
compensates districts for the presence of large tax-exempt tracts such
as military bases, public-housing projects, and Indian reservations
that cut into their local property-tax bases—but the state
redistributes three-quarters of that money statewide.

State Judge Joseph L. Rich agreed last summer that the state's
formula for distributing capital- outlay funds was unconstitutional. He
gave the state a year—until July 28—to come up with a
better plan.

Panel To Study Options

The new law allocates money for a study of the state's school
construction and repair needs and establishes a task force to
investigate a more permanent solution to the problem of the funding
formula.

Assistant Attorney General Bennett Cohn acknowledged last week that the
way the state has distributed capital-outlay funds shortchanged the
cash-poor districts because the formula failed to adjust sufficiently
for such districts' inability to raise money locally. The law
represents "some serious dollars" for needy districts, he said.

But since Judge Rich gave no concrete guidance when he mandated a
better system, no one knows if the new law will be considered
sufficient to justify dismissing the lawsuit, Mr. Cohn added.

Ron Van Amberg, the lawyer for the lead plaintiff district, the
1,800-student Zuni school system south of Gallup, said he was glad that
the new law would increase aid—it triples the $20 million that
the state has been making available annually for capital school
projects—and that in the first three years, it sets aside a third
of the new money for the 22 districts qualifying for federal impact
aid.

But he said the law still falls short of what his district and
others need: a bigger pool of money and a permanent change to the
funding-distribution formula.

"It's a good first step, but ultimately it won't satisfy the needs
of the neediest districts," Mr. Van Amberg said.

An earlier measure in the legislature—backed by the plaintiff
districts, the state superintendent of public instruction, the state
school boards association, and others—had proposed taking $2
billion from the state's $4 billion permanent severance-tax fund over
25 years. That bill and another, less expensive proposal gave way to
the compromise signed last week.

The compromise was brokered by Gov. Johnson, a Republican, who had
objected to the earlier proposals as "raids" on the severance-tax
fund.

Kathleen Forrer, the chief financial officer for the New Mexico
Department of Education, said that the new bonds would provide only
about a third of the $1.5 billion that a recent study concluded was
needed for school repair and construction projects in the state's 89
districts in the next 10 years. But she called the plan "a step in the
right direction," especially because of the sliding-scale funding
formula that would provide more state help to districts less able to
raise their own revenue.

Robert F. Gomez, the superintendent of the Gallup-McKinley County
district, a plaintiff district that is 83 percent Indian-reservation
land, said last week that his district needs at least $175 million for
facilities. It must provide lodging for teachers at reservation
schools, keep up a fleet of buses that traverse more than 5,000 square
miles of remote land to take children to school, and upgrade or build
new schools for its 14,000 students.

"Some of our schools have more portables than regular classrooms,"
he said.

Vol. 19, Issue 32, Page 33

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